The change we see happening with South Florida real estate over the last 36 months is dizzying.
Think about this for a sec’:
Many of today’s sellers bought their home in 2021, ’22, or ’23. They were thinking they invested at the “right time” paying over list prices and waiving inspections like every other buyer. Yet the right time to buy was back in 2012 – way before the frenzy began (that’s always the case – to get in when no one else is).
Then these owners put in capital to improve their home. Life was good.
But while they were putting money in, the South Florida real estate market was changing. It has changed monthly since 2023 from a seller to a buyer’s market. (Longtime readers can review my previous 20 months of this eLetter to refresh your memory).
Now, in mid 2025, they’re “into it” more than the market will bear. They’ve overspent. And now they’re stuck.
South Florida Real Estate Meets “Mr. Market”
This is when “Mr. Market” shows up.
He’s ruthless. He has no emotion. And he’s as present as one gets when times are more difficult.
In today’s market, Mr. Market is a home buyer. He shows up when sellers least want him around. He’s been looking at dozens of homes and only talks the truth. It goes like this:
“I know you bought it for $1,200,000. I know you put in about $450,000. I know you have about $1,650,000 into it. I know you will add on another $50k for costs and expenses that you didn’t include when you bought – that’s normal. And I know you “need ta” sell it for $1,950,000 for it to make sense.”
So, let’s do the math: the seller is “into” their home $1,700,000. They feel what they put into it is worth a profit.
But South Florida real estate is now a buyer’s market. The other side of the transaction has momentum as there are too many properties on the market for sale. (In fact, there is more supply now than ever recorded in Florida’s history). Just look at this South Florida real estate supply chart:
So, Mr. Market shows up and offers you $1,825,000. That’s a lot of money in anyone’s book. But at that price you subtract closing costs and agent compensation of about 5.5% total ($1,825,000 x 94.5% = $1,725,000) and you’ll be left with a lousy $25,000 profit.
That stinks.
Or you counter at $1,900,000 and the buyer walks away. Now your profit is $0.
That stinks, too.
As long as supply is high, and demand can’t gobble it up, you’re “stuck.” In your heart you believe you bought it at a good price 2 or 3 years ago. You added value to your property and thought you could make a few bucks from it.
But “Mr. Market” showed up and ruined your day.
Mr. Market is the dude who told you not to buy Tesla stock at $477 per share late last December, but you did as “things looked rosy” for the company’s upside. Then Musk made a couple bad choices and Tesla shares crashed 52% to $227 three months later. Instead of sitting tight and riding it out until share prices came back to $325 (which would be a 43% rise), you sold, took the loss, and moved on.
But in the South Florida real estate market we don’t think like that. We tend to think that real estate “only goes up.”
Well, it’s doesn’t always do that. Just like with stocks, sometimes we make and sometimes we lose money in South Florida real estate.
So instead of taking the $25,000 profit, learning from it, and moving on… your stubborn ego rears its head and gets in the way of a perfect moment to exit.
You don’t sell, you hang on. Supply rises. Prices ease. Demand wanes. We inch further into the South Florida real estate summer slow season. Your property value falls.
This is not fiction. This is real. And, it’s happening right now.
This is every seller’s Danger Zone.
Here’s one more chart about South Florida real estate and Fort Lauderdale’s supply. Too much for demand to consume:
If you’re a seller, accept the market for what it is today… not what it was in the past. Mr. Market is here to help you sell your South Florida real estate, but not at a profit that you believe is fair. That’s not Mr Market’s concern.
Welcome to our new reality.
(Main Photo: Sunset in Cancun Mexico last Friday night)
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*** In my latest video breakdown what’s happening with Florida Homeowners Associations based on several transactions I’ve been through in the last couple months. It’s a mess
*** Friday begins August – the month when hurricane activity kicks in. With the most active 90 days of the year ahead of us, preparation should be at the top of your priorities if you live here. Check our the City of Delray Beach website with useful information
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*** South Florida Real Estate Inventory is ABOVE 2019***
Last week’s supply was 60,276
Today’s supply is 60,227
*** Supply is UP 7,075 unit or 13% in 2025 ***
*** Supply is DOWN 5 of 7 weeks***
